Since 1975, Casinos have been the main source of attraction in Atlantic City, New Jersey. During the 1980’s through 1990’s, this casino haven surpassed the Vegas strip casinos in gambling revenue. Despite this early success, as of this week, all but a few casinos in Atlantic City have shut down. The remaining three casinos that are open today are expected to foreclose within the upcoming weeks. The reason behind the closings involves basic supply and demand laws. The casino market is one that is international, ultimately supplying too many casinos for its demand to catch up. Las Vegas, alongside Atlantic City, are considered two hotbeds for casino gambling. At one point, people across the globe traveled to these hot spots to enjoy the market for what it is. Now, we see high end casinos more local to consumers in states such as Pennsylvania, Maryland, and New York. Gambling analysts say that there is simply not enough people gambling today to satisfy all these casinos. Moreover, Atlantic City feeds off of the casino’s property tax revenue, accounting for 65% of the city’s budget. With these three casinos shutting down, it roughly amounts to a $30 million loss in property tax revenue. Not only is tax revenue down but unemployment numbers are skyrocketing with 6,000 employees now jobless.
Atlantis City’s mayor, Don Guardian, announced that he will now have to eliminate additional city employees to offset the lost tax revenue. In addition, Mayor Guardian plans to also raise property tax by 29% for homeowners. Atlantic City is now in shambles while the unemployment rate is 13%, more than double that of the U.S. national average. Governor Chris Christie initiated a five-year plan to boost the economic distress of Atlantic City. He plans to develop a convention center that will enable people to fly into the city’s small airport. This money will be used to hold events such as wine tastings, beach concerts, and aerospace shows. Moreover, the governor plans to incorporate a Bass Pro Shop, hunting and outdoor-goods store. With all these projects on the table, the question rises of whether or not this will overcome the harsh losses of gambling revenue.
Link : http://online.wsj.com/articles/atlantic-citys-big-bet-on-gambling-sours-1409329414
It is interesting to note that in recent years Atlantic City did not marker its beaches. Although they have a far lower budget for marketing than Las Vegas, that used to be a main attraction several decades ago. Also, it is no coincidence that the casinos in neighboring states are being negatively effected. People travel all over the country to visit casinos, so with many in the north east they are taking away business from each other. It will be interesting to see how Atlantic City rebounds from this downfall and if the people who lost jobs can find employment elsewhere.
ReplyDeleteI didn't realize how a city can be based around one industry and totally go under should that industry fail. With the amount of job and revenue loss, I think Mayor Guardian and Governor Christy aren't doing enough. The city will face harsh economic times that will be very difficult to come out of and the plan that is currently in place doesn't seem like it's big enough to do much of anything. A Bass Pro Shop and small convention center aren't going to lure people to fly to Atlantic City, when those two things are scattered all over the nation. The plan needs to incorporate job addition and not put so much strain on homeowners who may be facing unemployment.
ReplyDeleteI was surprised to read in your post how much of Atlantic City's budget comes from the casinos. I had always thought of Atlantic City as one of the country's major gambling locations but never realized how important the casinos were to the city's revenue. I believe that Governor Christie's five-year plan will help to bring the city out of economic distress. However, I'm not sure that the current plan will be enough considering that the casino's revenue made up 65% of the city's budget. I'm interested to see how effective the Mayor and Governor's plans are in boosting the city's economy.
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